Self sealing of export containers, and the seal trail

Circular No. 26/2017-Customs dated 01-07-2017 records the Board's decision to do away with the sealing of containers with export goods by departmental officials, and to substitute a self sealing procedure. The circular provides that the revised procedure regarding sealing of containers shall be effective from 01-09-2017 and that the extant circulars stand modified from that date to the extent the earlier procedure is contrary to it. What replaced the officer was not an honour system. It was a seal that carries data.

Who is entitled to self seal?

Circular No. 26/2017-Customs dated 01-07-2017 conditions the procedure on the exporter informing the jurisdictional customs officer of the premises where stuffing is to be carried out, and on the exporter being registered under GST and filing returns. Where the exporter is not a GST registrant, the circular requires the goods to be brought to a container freight station or inland container depot for stuffing and sealing, with an exception for status holders recognised by DGFT under a valid status holder certificate.

Circular No. 41/2017-Customs dated 30-10-2017 then sets out the classes it treats as obligated to adopt the electronic seal: exporters already approved for self sealing under the earlier procedures, exporters who had been availing supervised sealing and become automatically entitled without seeking fresh approval, authorised economic operators regardless of which route they were on, and all other exporters subject to filing GST returns but after seeking permission under paragraph 9(iii) of Circular No. 26/2017-Customs. Four doors, and only the last one requires an application.

How is the permission actually obtained?

Circular No. 26/2017-Customs dated 01-07-2017 sets a sequence with a lead time in it. An exporter wanting the facility informs the jurisdictional customs officer of the rank of Superintendent or Appraiser at least 15 days before the first planned movement of a consignment from the premises. That officer, or an Inspector, visits the premises, considers the viability of stuffing there, and submits a report to the jurisdictional Deputy or Assistant Commissioner within 48 hours, who forwards the proposal to the Principal Commissioner or Commissioner of Customs, who grants the permission.

Two features of that sequence are worth planning around. The circular provides that a self sealing permission once granted by a Principal Commissioner or Commissioner is valid for export at all customs stations, and that the granting formation circulates the permission along with the exporter's GSTIN to the custom houses concerned, so it is a one-time national permission rather than a port-by-port one. And once it is granted, the exporter furnishes only an intimation to the jurisdictional Superintendent each time self sealing is carried out, stating the place and address of the approved premises, the description of the goods and whether any incentive is being claimed.

What is fed into the electronic seal, and when?

The seal is not a padlock with a barcode. Circular No. 26/2017-Customs dated 01-07-2017 requires the exporter to seal the container with a tamper proof electronic seal of standard specification carrying a unique number that is declared in the shipping bill, and to feed data into the seal before sealing. The Jawaharlal Nehru Custom House FAQ on electronic sealing lists the mandatory elements as the IEC, the shipping bill number, the shipping bill date, the e-seal number, the date of sealing, the time of sealing, the destination customs station for export, the container number and the trailer or truck number.

The same FAQ records that the information is tagged to the seal through the vendor's web or mobile application rather than mounted in it, that data once uploaded cannot be deleted or edited, and that only a single shipping bill can be assigned to one e-seal. It also records that in terms of Circular No. 36/2017-Customs dated 28-08-2017 the seals must conform to ISO 17712:2013(H) and ISO/IEC 18000-6 Class 1 Gen 2. The uneditable field list is the point of the whole design, and it is also the reason a wrong shipping bill number is a container problem rather than a typing problem.

What happens when the container reaches the port?

The Jawaharlal Nehru Custom House FAQ records that on arrival of a self sealed container at the gateway port, the jurisdictional customs officer verifies the seal using a handheld or fixed reader to establish whether it is intact. Where the seal reads as not tampered, the consignment is processed for registration and grant of the let export order under the established procedures. Where it reads as tampered, the consignment is taken up for physical examination.

Circular No. 41/2017-Customs dated 30-10-2017 adds the consequence that matters afterwards. It provides that a full container load received under self sealing with an electronic seal is deemed equivalent to a container sealed under the earlier system of officer supervised sealing, and that unless there are good reasons or intelligence warranting inspection there is no need to examine such containers once the seal reads intact. It also provides that where a seal is found tampered and the container is examined, further movement of that container is not under the electronic seal procedure, and the traditional bottle seal system continues for those movements.

What breaks the seal trail?

Four things, and none of them is the seal itself.

• A wrong shipping bill number in the seal. The Jawaharlal Nehru Custom House FAQ records that data once confirmed cannot be deleted or edited, and advises checking accuracy before confirming. There is no correction path once the box is moving.
• Multiple shipping bills on one container. The same FAQ records that only a single shipping bill can be assigned to one e-seal, with dockets provided physically for the remaining shipping bills at the customs station.
• Arriving without a seal at all. Circular No. 41/2017-Customs dated 30-10-2017 provides that full containers brought to ports without electronic seals are taken to a container freight station or allowed direct port entry and are subject to the usual risk management treatment, and the same applies at inland container depots.
• Cargo the procedure does not cover. The same circular provides that the procedure does not apply to non-containerised cargo, air cargo, movement of cargo from container freight stations to depots or ports, or cargo exported through land customs stations, where the earlier practices continue.

There is also a deliberate carve-out. Circular No. 13/2018-Customs dated 30-05-2018 records the Board's decision to allow factory stuffing and sealing of reefer containers carrying perishable or temperature sensitive export goods in the presence of customs officials, on application to the jurisdictional Commissioner, with the request to be given at least 24 hours before stuffing. For those goods, supervision is the facilitation rather than the burden.

Which dates and which ports apply to you?

This is the part of the procedure that has moved most, so it is the part worth checking rather than remembering. Circular No. 41/2017-Customs dated 30-10-2017 refers to paragraph 5 of Circular No. 37/2017-Customs dated 20-09-2017 stating a mandatory electronic sealing date of 01-11-2017, and then records the Board taking stock of readiness at ports and depots. Circular No. 44/2017-Customs dated 18-11-2017 then relaxed the requirement, recorded that the procedure was voluntary for entitled exporters until 15-12-2017, and made electronic sealing mandatory from 15-12-2017 for specified classes of exporter at a named list of ports and inland container depots.

The consequence for an exporter is straightforward and unglamorous: the mandatory position is location specific and was revised more than once inside six months. Treat the port of export as a field on the shipment rather than as a constant, and confirm the position at that port. The same discipline applies to every dated obligation on an export file, which is why the EXIM compliance calendar is organised by date rather than by topic.

What does the seal trail actually give you?

A defensible narrative for one container. The seal number is declared in the shipping bill, the seal carries the shipping bill number and the container number, the sealing date and time are fixed at the premises, and the reader at the gateway port records whether the seal survived. That is a chain in which each link names the next, and it is the reason a self sealed container that reads intact is treated as equivalent to one an officer watched being sealed.

Purser Outbound keeps the seal number, the container number, the sealing timestamp and the shipping bill reference on the same shipment record the invoice and the packing list are projected from, so the number declared in the shipping bill and the number fed into the seal are the same number rather than two entries of it. Purser never submits to a government portal, and it never sends an outbound message without a recorded human approval event. The permission is yours, the seal is bought from the vendor, and the customs broker still files.

Where to go from here

Self sealing sits between the packed weight and the loaded vessel, and both of its neighbours have obligations that fail independently of it.

• The weight declared before the box is sealed. The verified gross mass declaration covers who owes it and by when.
• The number the seal is tied to. Shipping bill fields and what each one feeds covers the declaration the seal number is written into.
• The manifest that follows the sailing. IGM and EGM, the manifests either side of the voyage explains what the carrier owes after the box is aboard.
• Every dated obligation in one place. The EXIM compliance calendar lists what falls due and when.

Frequently asked questions

What replaced officer supervised factory stuffing for exports?

Self sealing under a tamper proof electronic seal. Circular No. 26/2017-Customs dated 01-07-2017 records the Board's decision to do away with the sealing of containers carrying export goods by departmental officials and to substitute a self sealing procedure, effective from 01-09-2017, with the extant circulars standing modified from that date to the extent they were contrary to it.

How does an exporter get self sealing permission?

Circular No. 26/2017-Customs dated 01-07-2017 requires the exporter to inform the jurisdictional customs officer of the rank of Superintendent or Appraiser at least 15 days before the first planned movement from the premises. The officer visits and reports on viability to the Deputy or Assistant Commissioner within 48 hours, who forwards the proposal to the Principal Commissioner or Commissioner of Customs, who grants permission. The permission once granted is valid for export at all customs stations.

What data has to be fed into an RFID e-seal?

The Jawaharlal Nehru Custom House FAQ on electronic sealing lists the mandatory elements as the IEC, the shipping bill number, the shipping bill date, the e-seal number, the date of sealing, the time of sealing, the destination customs station for export, the container number and the trailer or truck number. The data is tagged to the seal through the vendor's application and, once uploaded, cannot be deleted or edited.

What happens if the seal is found tampered at the gateway port?

The consignment is taken up for physical examination. The Jawaharlal Nehru Custom House FAQ records that a seal reading as not tampered leads to registration and grant of the let export order, while a tampered reading leads to examination. Circular No. 41/2017-Customs dated 30-10-2017 adds that after such an examination the further movement of that container is not under the electronic seal procedure and the traditional bottle seal system continues for it.

Does self sealing apply to air cargo or non containerised exports?

No. Circular No. 41/2017-Customs dated 30-10-2017 provides that the procedure under these circulars does not apply to the export of non containerised cargo or air cargo, to movement of cargo from container freight stations to inland container depots or ports, or to cargo exported through land customs stations, and that the existing practices continue for such cargo.